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This is the unedited version of the interview by MA. SALVE DUPLITO, Editor of Money Smarts, INQUIRER.net with me. I got a permission from her to post it here. Of course, once this gets edited, isang sentence na lang ang matitira. hehehe.

Question:

1. Former Labor Secretary Patricia Sto. Tomas has said that OFWs are the emerging middle class in the Philippines. Do you agree or disagree? Why? Please feel free to share anecdotal evidence or figures that you feel support your opinion.

Response:

In Philippine terms, just what is a “middle class” anyway? This was not fairly explained by the Former Labor Secretary. To her, the term “middle class” is simply based on the following, that:

• 70% of new purchases for small and middle level houses are OFW purchases

• Returning OFW’s have expressed interest in starting new small businesses instead of going back to wage and salary employment

• OFW investments are mainly in housing and education for the family

Before we could start putting some heads under this column called “middle class”, we need to define exactly what our parameters are. Else, we’re left with a very vague notion of a middle class.

1. Should we define middle class as one’s ability to buy small and middle level houses? What about those local employees whose personal income have risen to a point where they are able to afford the same purchases? Granted you have the ability to buy, the ability to keep the property (continuous payment if the purchase was through loans) is another big question.

2. Should we define middle class by just a mere interest of being an entrepreneur and not going back to a salaried level? Shouldn’t we ask why they prefer to be entrepreneur? Could it be because personal income has always been stagnant in the Philippine to maintain one’s relative standard of living?

3. Should we define middle class as being able to provide housing and education to the family? This one sounds good, right?

4.  I’m not trying to offend people who have jobs that lives from paycheck to paycheck who believes they fall under the middle/upper class, but if you earn say, a household income of Php100,000 per month (wife + husband), do you classify yourself as middle class?

5. If you’re single, a graduate of one the top-notch schools in the Philippines earning Php60,000 a month, do you classify yourself as middle class or upper class? What about the newly graduates who works at call centers receiving an average of Php15 or Php20k a month? Middle class?

So, exactly what does the Former Labor Secretary means? Reading between the lines, she seems to tell me that although the term is very squishy, she’s trying to bring it down to an economic concept. She’s trying to define middle class by how much they earn, being able to buy a house, start a business and provide housing and education to one’s family. Did I get it right? I think this is exactly what she means.

But the problem with what I believe her parameters is that, there are plenty of problems associated with using income figures because income and wealth alone doesn’t reflect the huge variation in living costs across the Philippines. Sample: I bought a 2-bedroom condo unit in Ortigas that cost me roughly Php3 million that sometimes leaves me scrambling for payment, but that same amount would certainly give me a very comfortable life if I used this amount to buy a house in say, Sorsogon because I’d be left with some more resources to invest. So, would you still put someone like me in a column called middle class where I am now struggling with other payments and can’t afford the other niceties in life? Or would you put me in the upper-middle class had I been in Sorsogon? Therefore, I don’t think we could always tie-up middle class to occupational earnings.

This brings me to the more important point, how do you maintain being in the middle class? We’ve heard of so many Filipinos who have gone up successfully in a flash only to lose their homes and spiral back to working class. Today, I have just received another text message from Saudi if I am interested in buying a house in San Pedro. I asked why? Because some friend of hers can no longer afford the monthly payment and there’s the possibility of the bank getting the property.

One would ask, exactly where is the bar? You see, Filipinos have this tendency to show off (magpaka-sosyal/mag-mayabang or trying-hard). Many Filipinos who have suddenly found some sparkling income go on a spending spree because of inflated expectations that they have arrived. They become too eager to buy the trappings of a middle or upper-class life trying to look and act like a middle or upper class when they’re not. Result? They wind up with a lot of credit card debts, mortgaging and re-mortgaging their houses with their long-term financial security evaporating like dust in the wind.

Personally, I’d go for the conservative definition of a middle class and that is, they are those who are earning enough to own a home, send kids to college (not necessarily expensive private school), provide health care expenses to the family, have some savings and investments and can afford to buy the comforts of life by having vacations and managing to stay in the middle class if not moving to the upper middle class level. Now, let’s put some peso numbers and translate these numbers province by province, city by city, depending on the localities standard of living. Would that be a reasonable parameter?

Going back to the question: Do I agree that the OFW’s are the emerging middle class in the Philippines? I do. I do see the Overseas Filipino Workers as the emerging middle class in the Philippines. Indeed, we are.

• We are the lucky ones who were able to get out of the country and blessed with opportunities that are missing at home.

• We are earning many times more than our counterpart in the Philippines.

• Some of us have benefits that included education to some of the best universities not only in the United States but around the world

• We’ve gained so much from learning other cultures that we’ve adapted the best out of these cultures which is why we tend to be sensitive as to how things are done in the Philippines and far more critical as to how things should be done because we could make some reasonable comparisons.

• We’ve gained competencies and became more competitive as far as skills and knowledge are concerned and have gained worldwide respect for the kind and type of valued skills we contribute

• We are actually a pillar to the progress of the Philippine economy with our remittances igniting entrepreneurship across the country.

Does this effectively puts us all to be in that column called middle class. Not that fast. It takes two to tango. Although we have what it takes to be a middle class, being one is dependent upon the OFW himself and to an equal extent to the government. Meaning, to be a middle class and to maintain and sustain being one is dependent upon the OFW and the government itself.

The role of an OFW to be in the middle or upper class takes a whole new mindset and concrete actions to be one:

• One must limit spending. These are lessons learned from lolo and from lola. Tipid. We all must spend less than what we make, simply put, we must all live within our means. This is the Holy Grail that we’ve been looking for that we can’t find in the Philippines, so why waste it?

• One must limit their debts. What you earn is yours and it’s not for creditors. For if we owe to many debts to too many people, we’re left with very few choices.

• Save, save, save! You never know when emergencies knock on your door.

• Planning for retirement is NOW! You don’t want to be like my officemate’s dad whose retirement in the Philippines is only Php2, 000 per quarter.

• Be smart and be ready at all times. We all have to constantly look for opportunities to always be in the middle or upper class. Honestly, no one will watch for you but you alone. There are a lot of dangers that will knock us off to be out of that level.

Whereas it is commendable that the government continues to be at the forefront of the labor export and at least doing its best to protect OFW’s, the role of the government must extend to assisting OFW’s returning to the country by creating incentives to enterprising OFW’s and providing programs to make them successful. I emphasize the word “make!”, because even if the returning OFW’s have the capacity to lead a good life and start an enterprise, without a good business climate and regulations for OFW’s, this will knock off OFW’s from that middle class or upper class column.

RELATED NEWS:

• 80% of OFW families now middle- and high-income

MORE TO COME…

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